• Barcode Ireland Team

Keeping the customer satisfied.

Updated: Oct 19, 2020

Thumbs up from a satisfied customer.

Customer satisfaction as an essential business strategy.

Kate Zabriskie, famous marketer and President of Business Training Works Inc., put it succinctly when she said, “Although your customers won’t love you if you give bad service, your competitors will.’

In today’s ultra competitive retail landscape, customer service is a critical differentiator. More than price and product, modern customers are about the experience, and by extension satisfaction - all the way through the sales funnel.

What is customer satisfaction and how is it measured?

Customer satisfaction or CSAT, is a metric used to quantify the degree to which a customer is happy with a product, service, or experience. This metric, usually calculated by means of a customer satisfaction survey, asks on a five to seven point scale how a customer feels about a purchase, support interaction, or overall customer experience, with potential answers between "highly unsatisfied" and "highly satisfied”. The survey responses are indicative of customer satisfaction and customer loyalty, predictors of customer referral.

Why is customer satisfaction an important business strategy?

A leading metric of repeat customers and customer loyalty

Customer satisfaction is indicative of how likely a customer will make a repeat purchase. Using CSAT to rate customer satisfaction is an effective means of forecasting whether they will become repeat customers or even brand evangelists. A high score indicates satisfaction and the likelihood of repeat purchases. Top scorers can obviously be leveraged as advocates. Low scores indicate poor customer satisfaction and consequently the likelihood of customer defection.

Key differentiator

Prioritising customer satisfaction in today’s competitive retail space is a key differentiator. Offering an exceptional service can sway customers to choose your brand over competitors who offer the same range of products and services, at the same price. In the digital age, customers are influenced by recommendations and product reviews on social media likely arising from excellent customer service and thereby rendering invaluable publicity. Businesses offering amazing customer experiences ensure customer advocates.

Customers are willing to pay more for premium customer service

As mentioned previously, customer experience is a high priority for modern shoppers with purchases increasing by 50% after a positive experience. Almost 90% would pay up to 25% more for a product or service to get a really superior customer service. Consumers are influenced by a single experience, a positive one will influence the customer to stay, a negative one, to stray.

Customer retention

Some 60% of customers will leave a business due to a poor customer service experience. For every customer complaint there are 26 other unhappy customers who have remained silent. Some 96% of unhappy customers don’t complain, they leave and never come back.

Customer retention is a lot cheaper than customer acquisition. It costs six to seven times more to acquire new customers than to retain existing customers. An 5% increase in customer retention equates to a 25% increase in profit. This is because repeat customers (and referrals) are more likely to spend more with your brand resulting in your business having to spend less on operating costs.

Investing in customer service decreases customer attrition rate, which in turn decreases the amount of spend on acquiring new customers and decreases the overall customer acquisition cost. Not only will you retain your customers but you will gain your competitors!

Customer retention is also a step in the direction of customer loyalty.

Customer loyalty

Customer satisfaction promotes customer loyalty. Providing a stellar customer experience means they need not look to your competitors. Ever. Return customers buy more from your brand over time and CLV, Customer Lifetime Value, results in increased profits for the business.

Negative word of mouth

Its estimated that one unhappy customer can share their negative experience with upwards of 20 other customers, either existing or prospective. Hence the utmost importance of monitoring and addressing customer satisfaction on an ongoing basis in eliminating bad word of mouth. Satisfied customers, on the other hand, will become brand advocates.

Customer advocacy

Satisfied customers are loyal customers who will make referrals to your business, growing your business faster than sales and marketing, at no cost to customer acquisition. Customer advocacy programmes encourage and reward customers for referring your business to potential leads. Incentivised to join the programme, they then receive gifts/offers in exchange for reviews and testimonials. This has the dual benefit of keeping customers loyal and continuously interacting with your brand. 

Creates marketing opportunities

Taking a proactive customer service approach lets customers know you are constantly striving to enhance their customer experience. Preempting issues before customers are alerted to them inspires customer confidence and can be a tool for introducing new products and services to your audience.

Companies that prioritise customer satisfaction grow and increase revenue. A great product or service, a competitive price but primarily, providing a great customer experience and by extension satisfaction, will be the key differentiator in the future of retail.

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